Naira Falls Against US Dollar, NFEM Rate Closed at NGN1332
The naira weakened against the US dollar at the Nigerian foreign exchange market (NFEM) with exchange rate depreciating to NGN1332.2582 at the close of trading session on Friday.
The local unit opened trading session much stronger last week than its closing rate, which signaled FX demand eclipsed total US dollar volume in the supply side.
According to FX report released by the Central Bank of Nigeria (CBN), the official exchange rate opened at N1331.1860 and closed at N1332.2582 to the US dollar last week.
This means that exchange rate depreciated slightly by 0.08% week on week in the absence of CBN FX intervention sales to deposit money banks and others acting as market makers in the interbank market.
Conversely, exchange rate appreciated by 0.14% week on week in the parallel market, settling at N1,359 to the US dollar. This resulted in about N27 spread on the dollar holdings.
Meanwhile, Nigeria’s external reserves increased marginally by 0.02% WoW to US$55.09 billion, reflecting a modest improvement in the country’s external liquidity position.
In the global oil market, crude oil prices were on track to record a weekly gain amid continued Iranian strikes on tankers in the Strait of Hormuz and a significant drawdown in U.S. crude inventories, which fell by 8.56 million barrels in the week ended October 9.
Brent crude closed at US$105.80 per barrel, while West Texas Intermediate (WTI) stood at US$97.70 per barrel. Although both benchmarks had retreated from their earlier weekly highs, they remained above the previous Friday’s levels. Nigeria’s Bonny Light crude declined by 4.42% to US$127.06 per barrel.
The naira is expected to remain sensitive to foreign exchange supply conditions and demand pressures across both the official and parallel markets, while Nigeria’s external reserves may provide a buffer against currency volatility. Cowry Asset Limited said in a note.
The market anticipates global crude oil prices to remain elevated amid geopolitical tensions in the Middle East and potential supply disruptions around the Strait of Hormuz.
However, fluctuations in global oil prices and changes in domestic crude production could influence Nigeria’s export earnings and external liquidity position, analysts said.
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